) posted operating earnings of $9.06 per share for the second
quarter of 2014, outperforming the Zacks Consensus Estimate of
$8.04 by 13%. Results also improved 34% year over year.
Underwriting results at the Reinsurance and Insurance segments were
better than the year-ago quarter and this primarily drove the
Alleghany Corporation - Earnings Surprise |
Behind the Headlines
Alleghany's top line improved 7.9% year over year to $1.29
billion, largely attributable to the rise in net investment income
and other income. The results comfortably exceeded the Zacks
Consensus Estimate of $1.19 billion.
Net investment income surged 14% year over year to $114.1 million
in the second quarter. This increase reflects an increased
allocation of the debt securities portfolio to higher yielding
securities, as well as more favorable reinvestment rates.
Total costs and expenses of $1.09 billion increased 3.8% from the
year-ago quarter due to rise in commissions, brokerage and other
underwriting expenses, along with other operating expenses and
corporate administration expense.
Underwriting profit came in at $110.1 million, up 40% from $78.8
million in the year-ago quarter. The upsurge was driven by strong
results at both Reinsurance and Insurance segments. Combined ratio
improved 260 basis points year over year to 90.0% in the reported
quarter, on the back of strong underwriting performance at TransRe
and RSUI due to lower cat losses.
Total net premiums written increased 4.4% year over year to $1.20
billion in the reported quarter, resulting from an increase in net
premiums written in TransRe. Net premiums written also rose in the
insurance segment owing to growth in CapSpecialty and PacificComp,
partly offset by a decline at RSUI stemming from increased
competition in the property lines of business.
Alleghany exited second-quarter 2014 with cash balance of $419.4
million, down 16% from Dec 31, 2013.
Alleghany's total assets of $23.8 billion increased 2.1% from the
Total shareholders' equity came in at nearly $7.4 billion as of Jun
30, 2014, up 6.6% from the 2013-end level.
Book value per share increased 9.4% to $451.65 as of Jun 30, 2014
from $412.96 as of Dec 31, 2013.
Share Repurchase Update
Alleghany spent $65.3 million to buy back 0.2 million shares in
second-quarter 2014 leaving $81.9 million under its $300 million
In July, the board of directors of Alleghany approved the company
to repurchase additional shares up to approximately of $350.0
million, upon the completion of the previously announced program.
Performances of Other Property and Casualty
Progressive Corp. (
) reported second-quarter operating earnings of 45 cents per share,
falling short of the Zacks Consensus Estimate by a couple of cents.
However, earnings improved 10% year over year.
RLI Corp.'s (
) second-quarter operating income of 66 cents per share came in
line with the Zacks Consensus Estimate. The figure also marked a
4.8% year-over-year increase.
Everest Re Group, Ltd. (
) posted second-quarter operating income of $5.41 per share,
lagging the Zacks Consensus Estimate by 6.3%. However, earnings
improved 6.1% year over year.
Alleghany presently sports a Zacks Rank #1 (Strong Buy).
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